----

----

|                    Delaware                 |                  65-0967706                 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (State or other jurisdiction of incorporation or organization)                                                                                                                                         | (I.R.S. Employer Identification No.)                                                                                                                                |

|  Large Accelerated Filer   ___                                                                                                                                            | Accelerated Filer   ___                  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|
|  Non-Accelerated Filer      X                               (Do not check if a smaller reporting company)     | Smaller Reporting Company   ___                                                                                               |

----

| PART I.  | FINANCIAL INFORMATION                                                                                                 | 3         |
|----------|-----------------------------------------------------------------------------------------------------------------------|-----------|
|     |                                                                                                                  |      |
| ITEM 1.  | FINANCIAL STATEMENTS                                                                                                  |  3   |
|     |                                                                                                                  |      |
|     | Condensed Consolidated Balance Sheets as of June 30, 2010 (unaudited) and December 31, 2009                           | 3         |
|     |                                                                                                        |      |
|     | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2009 (unaudited) |   4  |
|     |                                                                                                                  |      |
|     | Condensed Consolidated Statement of Shareholders’ Equity from January 1, 2010 through June 30, 2010 (unaudited) | 5         |
|     |                                                                                                                  |      |
|     | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009 (unaudited)           | 6         |
|     |                                                                                                                  |      |
|     | Notes to Condensed Consolidated Financial Statements (unaudited)                                                      | 7         |
|     |                                                                                                                  |      |
| ITEM 2.  | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION                                                             | 19        |
|     |                                                                                                                  |      |
| ITEM 3.  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                            |  26  |
|     |                                                                                                                  |      |
| ITEM 4.  | CONTROLS AND PROCEDURES                                                                                               |   27 |
|     |                                                                                                                  |      |
| ITEM 4T  | CONTROLS AND PROCEDURES                                                                                               |   27 |
|     |                                                                                                                  |      |
| PART II. | OTHER INFORMATION                                                                                                     |  29  |
|     |                                                                                                                  |      |
| ITEM 1.  | LEGAL PROCEEDINGS                                                                                                     |  29  |
|     |                                                                                                                  |      |
| ITEM 1A. | RISK FACTORS                                                                                                          |   29 |
|     |                                                                                                                  |      |
| ITEM 2.  | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS                                                           |  29  |
|     |                                                                                                                  |      |
| ITEM 3.  | DEFAULTS UPON SENIOR SECURITIES                                                                                       |   29 |
|     |                                                                                                                  |      |
| ITEM 4.  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                   |   29 |
|     |                                                                                                                  |      |
| ITEM 5.  | OTHER INFORMATION                                                                                                     |   29 |
|     |                                                                                                                  |      |
| ITEM 6.  | EXHIBITS AND REPORTS ON FORM 8-K                                                                                      |   29 |

----

| KODIAK ENERGY, INC.                                                                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Balance Sheets                                                                                                                        |   |
| (Going Concern Uncertainty-Note 1)                                                                                                                           |   |
|                                                                                                                                                         |   |   |   |   |   |   |
|                                                                                                                                                         |   | June 30, |   |   | December 31, |   |
|                                                                                                                                                         |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                         |   | (Unaudited) |   |   |   |   |
| Assets                                                                                                                                                       |   |   |   |   |   |   |
| Current Assets:                                                                                                                                              |   |   |   |   |   |   |
| Cash and short term deposits                                                                                                                                 |   | $ | 27,342 |   |   | $ | 2,058 |   |
| Accounts receivable                                                                                                                                          |   |   | 609,681 |   |   |   | 403,907 |   |
| Prepaid expenses and deposits                                                                                                                                |   |   | 178,500 |   |   |   | 151,390 |   |
|   Total current assets                                                                                                                             |   |   | 815,523 |   |   |   | 557,355 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Other assets                                                                                                                                                 |   |   | 292,451 |   |   |   | 296,153 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Goodwill (Note 3)                                                                                                                                            |   |   | 1,945,625 |   |   |   | - |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Oil and natural gas properties, Full cost accounting (Note 4)                                                                                                |   |   |   |   |   |   |   |   |
| Devaluated properties                                                                                                                                        |   |   | 7,919,254 |   |   |   | 6,823,400 |   |
| Less accumulated depreciation, depletion and amortization                                                                                                    |   |   | (2,703,554 | ) |   |   | (2,165,997 | ) |
|   Net                                                                                                                                              |   |   | 5,215,700 |   |   |   | 4,657,403 |   |
| Undeveloped properties excluded from amortization                                                                                                            |   |   | 21,765,530 |   |   |   | 26,081,786 |   |
| Furniture and fixtures, net                                                                                                                                  |   |   | 61,725 |   |   |   | 64,862 |   |
|                                                                                                                                                         |   |   | 27,042,955 |   |   |   | 30,804,051 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Total assets                                                                                                                                                 |   | $ | 30,096,554 |   |   | $ | 31,657,559 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Liabilities and Stockholders' Equity                                                                                                                         |   |   |   |   |   |   |   |   |
| Current Liabilities:                                                                                                                                         |   |   |   |   |   |   |   |   |
| Accounts payable                                                                                                                                             |   | $ | 2,449,535 |   |   | $ | 2,267,139 |   |
| Accrued liabilities                                                                                                                                          |   |   | 379,520 |   |   |   | 281,522 |   |
| Operating line of credit (Note 6)                                                                                                                            |   |   | 1,127,184 |   |   |   | - |   |
| Note payable (Note 2)                                                                                                                                        |   |   | - |   |   |   | 1,364,036 |   |
| Current debt (Note 7)                                                                                                                                        |   |   | 1,212,222 |   |   |   | 538,831 |   |
|   Total current liabilities                                                                                                                        |   |   | 5,168,461 |   |   |   | 4,451,528 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Long-term liabilities (Note 7)                                                                                                                               |   |   | 2,975,230 |   |   |   | 3,400,489 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Asset retirement obligations (Note 8)                                                                                                                        |   |   | 1,350,869 |   |   |   | 1,285,614 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Total liabilities                                                                                                                                            |   |   | 9,494,560 |   |   |   | 9,137,631 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Stockholders' equity                                                                                                                                         |   |   |   |   |   |   |   |   |
| Preferred stock, par value: $0.001 per share; 10,000,000 shares authorized, nil issued and outstanding                                                       |   |   | - |   |   |   | - |   |
| Common stock, par value $0.001 per share; 300,000,000 shares authorized; 110,407,186 shares issued and outstanding as of June 30, 2010 and December 31, 2009 |   |   | 110,407 |   |   |   | 110,407 |   |
| Additional paid in capital                                                                                                                                   |   |   | 50,785,117 |   |   |   | 50,851,469 |   |
| Accumulated comprehensive gain (loss)                                                                                                                        |   |   | 212,293 |   |   |   | (416,905 | ) |
| Deficit                                                                                                                                                      |   |   | (33,293,543 | ) |   |   | (28,283,170 | ) |
| Stockholders' equity attributable to Kodiak Energy, Inc.                                                                                                     |   |   | 17,814,274 |   |   |   | 22,261,801 |   |
| Non controlling interest                                                                                                                                     |   |   | 2,787,720 |   |   |   | 258,127 |   |
| Total stockholders' equity                                                                                                                                   |   |   | 20,601,994 |   |   |   | 22,519,928 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| Total liabilities and stockholders' equity                                                                                                                   |   | $ | 30,096,554 |   |   | $ | 31,657,559 |   |
|                                                                                                                                                         |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these condensed financial statements                                                                          |   |

----

| KODIAK ENERGY, INC.                                                                 |   |
|-------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Statements of Operations                                     |   |
| (Going Concern Uncertainty-Note 1)                                                  |   |
| (Unaudited)                                                                         |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
|                                                                                |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| REVENUE:                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Oil sales                                                                           |   | $ | 939,872 |   |   | $ | - |   |   | $ | 1,665,265 |   |   | $ | - |   |
| Other                                                                               |   |   | 3,536 |   |   |   | - |   |   |   | 3,577 |   |   |   | - |   |
|   Total revenue                                                           |   |   | 943,408 |   |   |   | - |   |   |   | 1,668,842 |   |   |   | - |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES:                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                                                                           |   |   | 471,531 |   |   |   | 1,002 |   |   |   | 774,766 |   |   |   | 2,172 |   |
| General and administrative                                                          |   |   | 628,201 |   |   |   | 356,427 |   |   |   | 1,280,721 |   |   |   | 849,889 |   |
| Depletion and depreciation                                                          |   |   | 370,954 |   |   |   | 16,034,536 |   |   |   | 4,781,263 |   |   |   | 16,042,324 |   |
| Interest                                                                            |   |   | 86,093 |   |   |   | 93 |   |   |   | 162,353 |   |   |   | 304 |   |
|  Total expenses                                                                |   |   | 1,556,779 |   |   |   | 16,392,058 |   |   |   | 6,999,103 |   |   |   | 16,894,689 |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss from operations                                                            |   |   | (613,371 | ) |   |   | (16,392,058 | ) |   |   | (5,330,261 | ) |   |   | (16,894,689 | ) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE):                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on settlement of debt                                                          |   |   | 72,657 |   |   |   | - |   |   |   | 72,657 |   |   |   | - |   |
| Loss on disposal of assets                                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (2,164 | ) |
| Interest income                                                                     |   |   | 792 |   |   |   | 725 |   |   |   | 792 |   |   |   | 923 |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss before income taxes                                                        |   |   | (539,922 | ) |   |   | (16,391,333 | ) |   |   | (5,256,812 | ) |   |   | (16,895,930 | ) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income taxes                                                                        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                            |   |   | (539,922 | ) |   |   | (16,391,333 | ) |   |   | (5,256,812 | ) |   |   | (16,895,930 | ) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non controlling interest                                                            |   |   | 141,834 |   |   |   | 11,780 |   |   |   | 246,439 |   |   |   | 15,842 |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET LOSS ATTRIBUTABLE TO KODIAK ENERGY, INC.                                        |   | $ | (398,088 | ) |   | $ | (16,379,553 | ) |   | $ | (5,010,373 | ) |   | $ | (16,880,088 | ) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loss per common share (basic and fully diluted)                                     |   | $ | (0.00 | ) |   | $ | (0.15 | ) |   | $ | (0.05 | ) |   | $ | (0.15 | ) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average number of shares outstanding (basic and fully diluted)             |   |   | 110,407,186 |   |   |   | 110,023,998 |   |   |   | 110,407,186 |   |   |   | 110,023,998 |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                            |   | $ | (398,088 | ) |   | $ | (16,379,553 | ) |   | $ | (5,010,373 | ) |   | $ | (16,880,088 | ) |
| Foreign currency translation gain (loss)                                            |   |   | 1,840,031 |   |   |   | 4,418,525 |   |   |   | 629,198 |   |   |   | 3,933,458 |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss:                                                                 |   |   | 1,441,943 |   |   |   | (11,961,028 | ) |   |   | (4,381,175 | ) |   |   | (12,946,630 | ) |
| Comprehensive loss attributable to non controlling interest                         |   |   | 141,834 |   |   |   | 11,780 |   |   |   | 246,439 |   |   |   | 15,842 |   |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Comprehensive loss attributable to Kodiak Energy, Inc.                              |   | $ | 1,583,777 |   |   | $ | (11,949,248 | ) |   | $ | (4,134,736 | ) |   | $ | (12,930,788 | ) |
|                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these condensed financial statements |   |

----

| KODIAK ENERGY, INC.                                            |   |
|----------------------------------------------------------------|--------|
| Condensed Consolidated Statement of Shareholders' Equity       |   |
| From January 1, 2010 through June 30, 2010                |   |
| (Going Concern Uncertainty-Note 1)                             |   |
| (Unaudited)                                                    |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   | Additional |   |   | Other |   |   |   |   |   |   |   |   | Total |   |
|                                                           |   | Preferred shares |   |   | Common shares |   |   | Paid in |   |   | Comprehensive |   |   | Accumulated |   |   | Non-Controlling |   |   | Stockholders' |   |
|                                                           |   | Shares |   |   | Amount |   |   | Shares |   |   | Amount |   |   | Capital |   |   | Income (loss) |   |   | Deficit |   |   | Interest |   |   | Equity |   |
| Balance, January 1, 2010                                       |   |   | - |   |   | $ | - |   |   |   | 110,407,186 |   |   | $ | 110,407 |   |   | $ | 50,851,469 |   |   | $ | (416,905 | ) |   | $ | (28,283,170 | ) |   | $ | 258,127 |   |   | $ | 22,519,928 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Stock based compensation                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 324,070 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 324,070 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Effect of change in ownership of majority owned subsidiary     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 236,519 |   |   |   | - |   |   |   | - |   |   |   | 129,956 |   |   |   | 366,475 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Disposition of non-controlling interest in Cougar Energy, Inc. |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (626,941 | ) |   |   | - |   |   |   | - |   |   |   | (258,127 | ) |   |   | (885,068 | ) |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Foreign currency translation                                   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 629,198 |   |   |   | - |   |   |   | - |   |   |   | 629,198 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-controlling interest in Cougar Oil and Gas                 |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 2,904,203 |   |   |   | 2,904,203 |   |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                       |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (5,010,373 | ) |   |   | (246,439 | ) |   |   | (5,256,812 | ) |
|                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, June 30, 2010                                         |   |   | - |   |   | $ | - |   |   |   | 110,407,186 |   |   | $ | 110,407 |   |   | $ | 50,785,117 |   |   | $ | 212,293 |   |   | $ | (33,293,543 | ) |   | $ | 2,787,720 |   |   | $ | 20,601,994 |   |

----

| KODIAK ENERGY, INC.                                                                 |   |
|-------------------------------------------------------------------------------------|--------|
| Condensed Consolidated Statements of Cash Flows                                     |   |
| (Going Concern Uncertainty-Note 1)                                                  |   |
| (Unaudited)                                                                         |   |
|                                                                                |   |   |   |   |   |   |
|                                                                                |   | Six months ended June 30, |   |
|                                                                                |   | 2010 |   |   | 2009 |   |
|                                                                                |   |   |   |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                               |   |   |   |   |   |   |
| Net loss                                                                            |   | $ | (5,010,373 | ) |   | $ | (16,880,088 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities:         |   |   |   |   |   |   |   |   |
| Loss from non controlling interest, net of tax                                      |   |   | (246,439 | ) |   |   | (15,842 | ) |
| Depreciation and depletion                                                          |   |   | 4,781,263 |   |   |   | 16,042,324 |   |
| Accretion of discount on debt                                                       |   |   | 139,207 |   |   |   | - |   |
| Accretion of asset retirement obligation                                            |   |   | 45,376 |   |   |   | - |   |
| Stock based compensation                                                            |   |   | 324,070 |   |   |   | 294,719 |   |
| Gain on settlement of debt                                                          |   |   | (72,657 | ) |   |   | - |   |
| Loss on disposal of fixed assets                                                    |   |   | - |   |   |   | (2,164 | ) |
| Working capital changes (Note 16)                                                   |   |   | 5,712 |   |   |   | 193,432 |   |
| Net cash used in operating activities                                               |   |   | (33,841 | ) |   |   | (367,619 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                               |   |   |   |   |   |   |   |   |
| Purchases of fixed assets                                                           |   |   | (1,135,950 | ) |   |   | (394,186 | ) |
| Purchases of other assets                                                           |   |   | - |   |   |   | (14,293 | ) |
| Net cash used in investing activities                                               |   |   | (1,135,950 | ) |   |   | (408,479 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                               |   |   |   |   |   |   |   |   |
| Shares issued or issuable                                                           |   |   | - |   |   |   | (98,648 | ) |
| Advances on the revolving line of credit                                            |   |   | 1,127,184 |   |   |   | 472,890 |   |
| Non controlling interest contribution                                               |   |   | - |   |   |   | 416,339 |   |
| Net proceeds from long term debt                                                    |   |   | 227,083 |   |   |   | 1,874 |   |
| Net cash provided by financing activities                                           |   |   | 1,354,267 |   |   |   | 792,455 |   |
|                                                                                |   |   |   |   |   |   |   |   |
| Effect of foreign currency rate change on cash                                      |   |   | (159,192 | ) |   |   | (42,245 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                                |   |   | 25,284 |   |   |   | (25,888 | ) |
|                                                                                |   |   |   |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                                      |   |   | 2,058 |   |   |   | 75,175 |   |
| Cash and cash equivalents, end of period                                            |   | $ | 27,342 |   |   | $ | 49,287 |   |
|                                                                                |   |   |   |   |   |   |   |   |
|                                                                                |   |   |   |   |   |   |   |   |
| The accompanying notes are an integral part of these condensed financial statements |   |

----

----

|   The following table summarizes the calculation of the fair value of consideration transferred to acquire Ore-more: |   |                                                                                    |      |
|---------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------|-----------|
|                                                                                                                      |   |                                                                                    |      |
| Cougar shares issued                                                                                                      |   |              5,630,913 |  (a) |
| Multiplied by                                                                                                             |   | $                                                                                       | 0.61      |  (b) |
|                                                                                                                      |   | $                                                                                       | 3,451,468 |   |
|                                                                                                                      |   |                                                                                    |      |   |

| Assets acquired:                                                       |   |   |      |
|------------------------------------------------------------------------|--------|--------|-----------|
| Current                                                                |   |   |      |
|      Cash                                     |   | $      | 7,611     |   |
|      Accounts receivable                      |   | $      | 1,326,786 |   |
|                                                                   |   |   |      |   |
| Liabilities assumed:                                                   |   |   |      |   |
| Current                                                                |   |   |      |   |
|      Accounts payable and accrued liabilities |   | $      | (5,693    | ) |
|      Operating Line                           |   | $      | -         |   |
|      Current debt                             |   | $      | (97,927   | ) |
|      Inter- Company Payables                  |   |   |      |   |
|                                                                   |   | $      | 1,230,777 |   |
| NCI eliminated                                                         |   | $      | 626,949   |   |
|                                                                   |   |   |      |   |
| Purchase price                                                         |   | $      | 3,451,468 |   |
|                                                                   |   |   |      |   |
| Good will on acquisition                                               |   | $      | 1,593,742 |   |

| (a)   | In accordance with ASC 805-40 this represents the Number of Shares Cougar would have had to issue to give the owners of Ore-more the same percentage equity interest in the combined entity that results from the reverse acquisition. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Represents the stock price of Cougar's private placement to unrelated parties on December 16, 2009, adjusted for the Ore-More 3- 1 reverse stock split effectuated on January 25, 2010. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| June 30, 2010:          |   |   |       |   |                                 |   |       |                            |   |
|-------------------------|--------|--------|------------|--------|--------------------------------------|--------|------------|---------------------------------|--------|
|                    |   | Cost   |       |   | AccumulatedDepreciation andDepletion |   |       | Net book ValueJune 30, 2010     |   |
| Oil and Gas Properties: |   |   |       |   |                                 |   |       |                            |   |
| Developed               |   |   |       |   |                                 |   |       |                            |   |
| Canada                  |   | $      | 7,919,254  |   |                                 | $      | 2,703,554  |                            |   | $ | 5,215,700 |   |
|                    |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| Undeveloped             |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| Canada                  |   |   | 32,045,784 |   |                                 |   | 17,410,720 |                            |   |   | 14,635,064 |   |
| United States           |   |   | 11,773,333 |   |                                 |   | 4,642,867  |                            |   |   | 7,130,466 |   |
|                    |   |   | 43,819,117 |   |                                 |   | 22,053,587 |                            |   |   | 21,765,530 |   |
|                    |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| Furniture and Fixtures  |   |   | 172,591    |   |                                 |   | 110,866    |                            |   |   | 61,725 |   |
| Total                   |   | $      | 53,337,357 |   |                                 | $      | 25,481,494 |                            |   | $ | 27,042,955 |   |
|                    |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| December 31, 2009:      |   |   |       |   |                                 |   |       |                            |   |   |   |   |
|                    |   | Cost   |       |   | AccumulatedDepreciation andDepletion |   |       | Net book ValueDecember 31, 2009 |   |
| Oil and Gas Properties: |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| Developed               |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| Canada                  |   | $      | 6,823,400  |   |                                 | $      | 2,165,997  |                            |   | $ | 4,657,403 |   |
|                    |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| Undeveloped             |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| Canada                  |   |   | 32,441,500 |   |                                 |   | 17,634,524 |                            |   |   | 14,806,976 |   |
| United States           |   |   | 11,773,677 |   |                                 |   | 498,867    |                            |   |   | 11,274,810 |   |
|                    |   |   | 44,215,177 |   |                                 |   | 18,133,391 |                            |   |   | 26,081,786 |   |
|                    |   |   |       |   |                                 |   |       |                            |   |   |   |   |
| Furniture and Fixtures  |   |   | 168,166    |   |                                 |   | 103,304    |                            |   |   | 64,862 |   |
| Total                   |   | $      | 51,206,743 |   |                                 | $      | 20,402,692 |                            |   | $ | 30,804,051 |   |

----

|                                                                                     |   | June 30, 2010 |      |
|------------------------------------------------------------------------------------------|--------|---------------|-----------|
| Amount due to vendor of acquired properties present value  of total amount due |   | $             | 4,086,042 |   |
| Deposit obligation relating to undeveloped properties                                    |   |          | 44,920    |   |
| Amount of discount to be accreted in the future (at 7.5% annually - .0625% per month)    |   |          | (509,290  | ) |
| Total Amount due                                                                         |   |          | 3,621,672 |   |
| Less: Current portion                                                                    |   |          | 646,442   |   |
| Long-term portion                                                                        |   | $             | 2,975,230 |   |
|                                                                                     |   |          |      |   |
|                                                                                     |   |          |      |   |
| Current portion of long-term debt                                                        |   | $             | 646,442   |   |
| Other short-term debt                                                                    |   |          | 565,780   |   |
| Total short-term debt                                                                    |   | $             | 1,212,222 |   |

----

| Asset retirement obligations, December 31, 2009 |   | $      | 1,285,614 |   |
|-------------------------------------------------|--------|--------|-----------|--------|
| Foreign exchange                                |   |   | 1,175     |   |
| Additions                                       |   |   | 18,704    |   |
| Accretion                                       |   |   | 45,376    |   |
| Asset retirement obligations, June 30, 2010     |   | $      | 1,350,869 |   |

|                               |   | June 30, 2010             |   |
|------------------------------------|--------|---------------------------|--------|
|                               |   | Weighted average Exercise |   |
|                               |   | Price                     |   |   | Shares |   |
| Outstanding at beginning of period |   | $                         | 0.57   |   |   |   | 6,060,000 |   |
| Options granted                    |   |                      | -      |   |   |   | - |   |
| Options forfeited                  |   |                      | 1.25   |   |   |   | (555,000 | ) |
| Outstanding at end of period       |   |                      | 0.54   |   |   |   | 5,505,000 |   |
| Exercisable at end of period       |   | $                         | 0.73   |   |   |   | 2,371,667 |   |

|                   |      | Outstanding                       |   | Exercisable |
|------------------------|-----------|-----------------------------------|--------|-------------|
| Range ofExercise Price |      | Numberoutstandingat June 30, 2010 |   |        | WeightedAverageremainingContractual life |   |   | WeightedaverageExercise Price |   |   | Aggregateintrinsicvalue |   | Numberoutstandingat June 30,2010 |   |   | WeightedaverageExerciseprice |   |   | AggregateIntrinsicValue |   |
|                   | .28-1.28  |                              |   | 4,725,000   |   |   |   | 3.89 |   |   |   | 0.32 |   |   |   | - |   |   |   | 1,625,000 |   |   |   | 1.02 |   |   |   | - |   |
|                   | 1.29-2.28 |                              |   | 680,000     |   |   |   | 1.40 |   |   |   | 1.41 |   |   |   | - |   |   |   | 680,000 |   |   |   | 1.41 |   |   |   | - |   |
|                   | 2.29-3.28 |                              |   | 100,000     |   |   |   | 2.42 |   |   |   | 2.58 |   |   |   | - |   |   |   | 66,667 |   |   |   | 2.58 |   |   |   | - |   |

----

|                            |      |   | NonvestedOptions |       |    | Weighted-AverageGrant DateFair Value |   |
|---------------------------------|-----------|--------|------------------|------------|---------|--------------------------------------|--------|
| Non vested at December 31, 2009 |      |   |             | 4,756,667  |    |                                 |   | 0.25 |   |
|                            | Granted   |   |             | -          |    |                                 |   | - |   |
|                            | Vested    |   |             | (1,523,334 | )       |                                 |   | 0.26 |   |
|                            | Forfeited |   |             | (100,000   | )  |                                 |   | 0.19 |   |
| Non vested at June 30, 2010     |      |   |             | 3,133,333  |    |                                 |   | 0.25 |   |

| June 30, 2010    |   |
|------------------|--------|
| Weighted Average |   |
| Exercise Price   |   | Shares |
| $           | 2.02   |   | 35,000 |
|             | 2.38   |   | 600,000 |
| $           | 2.36   |   | 635,000 |

| Outstanding                         |   |   |                                        |   |   |                             |   |   |                      |   |                                | Exercisable |   |                            |   |   |                      |   |   |
|-------------------------------------|--------|--------|---------------------------------------------|--------|--------|----------------------------------|--------|--------|---------------------------|--------|-------------------------------------|-------------|--------|---------------------------------|--------|--------|---------------------------|--------|--------|
| Number outstanding at June 30, 2010 |   |   | Weighted Average remaining Contractual life |   |   | Weighted average Exercises Price |   |   | Aggregate intrinsic value |   | Number outstanding at June 30, 2010 |        |   | Weighted average Exercise price |   |   | Aggregate Intrinsic Value |   |
| 35,000                              |   |   |                                        | 4.75   |   |                             |   | 2.02   |                      |   |                                | -           |   |                            |   | -      |                      |   |   | - |   |   |   | - |   |
| 600,000                             |   |   |                                        | 4.92   |   |                             |   | 2.38   |                      |   |                                | -           |   |                            |   | -      |                      |   |   | - |   |   |   | - |   |
| 635,000                             |   |   |                                        |   |   |                             |   | 2.36   |                      |   |                                |        |   |                            |   | -      |                      |   |   | - |   |   |   | - |   |

----

| June 30, 2010        |   |
|----------------------|--------|
| Weighted Average     |   |
|  Exercise Price |   | Shares |
| $               | 0.65   |   | 625,000 |
|                 | 1.30   |   | 295,000 |
| $               | 0.86   |   | 920,000 |

| Outstanding                         |    |   |                                        |   |   |                             |   |   |                      |   |                                | Exercisable |   |                            |   |   |                      |   |   |
|-------------------------------------|---------|--------|---------------------------------------------|--------|--------|----------------------------------|--------|--------|---------------------------|--------|-------------------------------------|-------------|--------|---------------------------------|--------|--------|---------------------------|--------|--------|
| Number outstanding at June 30, 2010 |    |   | Weighted Average remaining Contractual life |   |   | Weighted average Exercises Price |   |   | Aggregate intrinsic value |   | Number outstanding at June 30, 2010 |        |   | Weighted average Exercise price |   |   | Aggregate Intrinsic Value |   |
|                                | 625,000 |   |                                        |   | 3.54   |                             |   |   | 0.65                      |   |                                |        | -      |                            |   |   | 208,336                   |   |   |   | 0.65 |   |   |   | - |   |
|                                | 295,000 |   |                                        |   | 4.34   |                             |   |   | 1.30                      |   |                                |        | -      |                            |   |   | -                         |   |   |   | - |   |   |   | - |   |
|                                | 920,000 |   |                                        |   |   |                             |   |   | 0.86                      |   |                                |        |   |                            |   |   | 208,336                   |   |   |   | 0.65 |   |   |   | - |   |

|                 |   | Exercise Price ($) |   | Expiry Date |   | Equivalent SharesOutstanding |   |   | Weighted AverageYears to Expiry |   |
|----------------------|--------|--------------------|--------|-------------|--------|------------------------------|--------|--------|---------------------------------|--------|
| Issued June 30, 2006 |   | 3.50               |   | Jun. 30/11  |   | 1,130,000                    |   |   | 1.00                            |   |

| Net loss Attributable to the Company and transfers (to) from non-controlling interest for the six months ended June 30, 2010 |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                         |   |   |   |
| Net loss attributable to Kodiak                                                                                              |   | $ | 663,805 |   |
| Transfer (to) from the non-controlling interest                                                                              |   |   |   |   |
| Average non-controlling interest percentage                                                                                  |   |   | 37.13 | % |
| Net loss attributable to the Company and transfer (to) from non-controlling interest                                         |   |   | 246,439 |   |

----

|                                                                                                         |   |   |      |
|--------------------------------------------------------------------------------------------------------------|--------|--------|-----------|
| Balance, January 1, 2010                                                                                     |   | $      | 258,127   |   |
| Transfer (to) from the non-controlling interest as a result of change in ownership (See Notes 2 and 3 above) |   |   | 2,776,032 |   |
| Net loss attributable to the Company                                                                         |   |   | (246,439  | ) |
| Net loss attributable to the Company and transfer (to) from non-controlling interest                         |   |   | 2,787,720 |   |

|                                                  |   | For the three months ended June 30, 2010 |        |    | For the three months ended June 30, 2009 |   |
|-------------------------------------------------------|--------|------------------------------------------|-------------|---------|------------------------------------------|--------|
| Numerator:                                            |   |                                     |        |    |                                     |   |
| Numerator for basic and diluted loss per share.       |   |                                     |        |    |
| Net loss                                              |   |                                     | (398,088    | )  |                                     |   | (16,379,553 | ) |
| Denominator:                                          |   |                                     |        |    |                                     |   |   |   |
| Denominator for basic and diluted loss per share |   |                                     |        |    |                                     |
| Weighted average shares outstanding                   |   |                                     | 110,407,186 |    |                                     |   | 110,023,998 |   |
|                                                  |   |                                     |        |    |                                     |   |   |   |
| Denominator for diluted loss per share                |   |                                     |        |    |                                     |   |   |   |
| Weighted average shares outstanding                   |   |                                     | 110,407,186 |    |                                     |   | 110,023,998 |   |
| Basic and diluted loss per share                      |   | $                                        | (0.00       | )  |                                     | $      | (0.15 | )  |

|                                                  |   | For the six months ended June 30, 2010 |        |    | For the six months ended June 30, 2009 |   |
|-------------------------------------------------------|--------|----------------------------------------|-------------|---------|----------------------------------------|--------|
| Numerator:                                            |   |                                   |        |    |                                   |   |
| Numerator for basic and diluted loss per share.       |   |                                   |        |    |
| Net loss                                              |   |                                   | (5,010,373  | )  |                                   |   | (16,880,088 | ) |
| Denominator:                                          |   |                                   |        |    |                                   |   |   |   |
| Denominator for basic and diluted loss per share |   |                                   |        |    |                                   |
| Weighted average shares outstanding                   |   |                                   | 110,407,186 |    |                                   |   | 110,023,998 |   |
|                                                  |   |                                   |        |    |                                   |   |   |   |
| Denominator for diluted loss per share                |   |                                   |        |    |                                   |   |   |   |
| Weighted average shares outstanding                   |   |                                   | 110,407,186 |    |                                   |   | 110,023,998 |   |
| Basic and diluted loss per share                      |   | $                                      | (0.05       | )  |                                   | $      | (0.15 | )  |

----

|                |   | June 30, 2010 |    |   | June 30, 2009 |   |
|---------------------|--------|---------------|---------|--------|---------------|--------|
| Amounts payable in: |   |          |    |   |          |   |
| 2010                |   | $             | 96,556  |   |          | $      | 13,666 |   |
| 2011                |   |          | 172,003 |   |          |   | 24,983 |   |
| 2012                |   |          | 167,752 |   |          |   | - |   |
| 2013                |   | $             | 42,409  |   |          | $      | - |   |

----

|                                 |   | Three Months Ended June 30, 2010 |      |    | Six Months Ended June 30, 2010 |   |
|--------------------------------------|--------|----------------------------------|-----------|---------|--------------------------------|--------|
|                                 |   | U. S.                            |      |    | Canada                         |   |   | Total |   |   | U. S. |   |   | Canada |   |   | Total |   |
| Revenue, net of royalties            |   | $                                | -         |    |                           | $      | 943,408 |   |   | $ | 943,408 |   |   | $ | - |   |   | $ | 1,668,842 |   |   | $ | 1,668,842 |   |
| Income during the Evaluation Period: |   |                             | -         |    |                           |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net Loss                             |   |                             | (4,209    | )  |                           |   | (393,879 | )  |   |   | (398,088 | )  |   |   | (4,152,273 | )  |   |   | (858,100 | )  |   |   | (5,010,373 | )  |
| Capital Assets                       |   |                             | 7,132,466 |    |                           |   | 19,910,489 |   |   |   | 27,042,955 |   |   |   | 7,132,466 |   |   |   | 19,910,489 |   |   |   | 27,042,095 |   |
| Total Assets                         |   |                             | 7,135,892 |    |                           |   | 22,960,663 |   |   |   | 30,096,555 |   |   |   | 7,135,892 |   |   |   | 22,960,663 |   |   |   | 30,096,555 |   |
| Capital Expenditures                 |   |                             | (1,496    |  ) |                           |   | 1,506,937 |   |   |   | 1,505,441 |   |   |   | 1,656 |   |   |   | 1,134,294 |   |   |   | 1,135,950 |   |

|                                 |   | Three Months Ended June 30, 2009 |       |   | Six Months Ended June 30, 2009 |   |
|--------------------------------------|--------|----------------------------------|------------|--------|--------------------------------|--------|
|                                 |   | U. S.                            |       |   | Canada                         |   |   | Total |   |   | U. S. |   |   | Canada |   |   | Total |   |
| Revenue, net of royalties            |   | $                                | -          |   |                           | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Income during the Evaluation Period: |   |                             | -          |   |                           |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net Loss                             |   |                             | 4,629      |   |                           |   | 16,374,924 |   |   |   | 16,379,553 |   |   |   | 21,076 |   |   |   | 16,859,012 |   |   |   | 16,880,088 |   |
| Capital Assets                       |   |                             | 11,277,319 |   |                           |   | 14,031,951 |   |   |   | 25,309,270 |   |   |   | 11,277,319 |   |   |   | 14,031,951 |   |   |   | 25,309,270 |   |
| Total Assets                         |   |                             | 11,281,042 |   |                           |   | 14,576,735 |   |   |   | 25,857,777 |   |   |   | 11,281,042 |   |   |   | 14,576,735 |   |   |   | 25,857,777 |   |
| Capital Expenditures                 |   |                             | 20,172     |   |                           |   | 464,449 |   |   |   | 484,620 |   |   |   | 26,730 |   |   |   | 706,653 |   |   |   | 733,383 |   |

----

|                                      |   | Six Months EndedJune 30, 2010 |     |    | Six Months EndedJune 30, 2009 |   |
|-------------------------------------------|--------|-------------------------------|----------|---------|-------------------------------|--------|
|                                      |   |                          |     |    |                          |   |
| Operating Activities:                     |   |                          |     |    |                          |   |
|   Accounts Receivable           |   | $                             | (205,774 | )       |                          |   | (33,275 | )  |
|   Prepaid Expenses and Deposits |   |                          | (23,410  | )  |                          |   | 17,819 |   |
|   Accounts Payable              |   |                          | 182,399  |    |                          |   | 251,686 |   |
|   Accrued Liabilities           |   |                          | 97,998   |    |                          |   | (42,798 | ) |
|   Other                         |   |                          | (45,501  | )  |                          |   | - |   |
|                                      |   |                          |     |    |                          |   |   |   |
| Total                                     |   | $                             | 5,712    |    |                          |   | 193,432 |   |

----

----

| ·   | Cougar Trout Properties, Alberta (Core Area) – farm-in and acquired lands in the Trout, Kidney and Equisetum fields; |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

| ·   | CREEnergy Project, Alberta – mineral leases, exploration and development opportunities within the CREEnergy Agreement and several current and proposed Northern Alberta Treaty Land Entitlement Claims; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Lucy, British Columbia – Horn River Basin Muskwa shale gas project; |
|--------------------|---------------------------------------------------------------------------|

| ·   | and Other Alberta properties. |
|--------------------|-------------------------------|

----

| ·     | The existing area field personnel agreed to transfer to Cougar with their many years of hands-on field expertise thereby greatly reducing the risk of downtime due to lack of qualified field personnel. |
|---------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·     | The existing pipeline systems provides direct access to sales of oil products, which results in the access to sales being in the Company’s control and not third party pipeline operator dependent. |
|---------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·     | There are 2 batteries for the handling and treating of oil and the disposal of the produced water. The batteries are capable of handling an estimated 2,500 bbl/d with nominal refit costs. |
|---------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·     | Many of the wells are piped into the batteries to reduce the need for trucking, which is important for the higher water cut wells. These pipelines can be expanded to further lower operating costs. |
|---------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·     | There are 37 wells, which 13 were producing as of December 31, 2009. The 20 suspended wells are workover or recompletion candidates. |
|---------------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| ·     | The produced water can be used for future water floods, which regularly have been shown to add substantial incremental production in the area. |
|---------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·     | Acid wash of perforations – |
|---------------------------|-----------------------------------|

| ·     | Use of enhanced chemical treatment programs to improve inflow – ongoing on all wells |
|---------------------------|--------------------------------------------------------------------------------------------|

| ·     | Setting of bridge plugs to seal off water – |
|---------------------------|---------------------------------------------------|

| ·     | Cleanouts – |
|---------------------------|-------------------|

| ·     | Re perforating – |
|---------------------------|------------------------|

| ·     | Drill out plugs and open up previously unproduced zones – |
|---------------------------|-----------------------------------------------------------------|

| ·     | Repairs to wells with separated rods – |
|---------------------------|----------------------------------------------|

| ·     | Plug off water sources with no resulting loss of production – ongoing |
|---------------------------|-----------------------------------------------------------------------------|

| ·     | Pump  and well site equipment optimization – ongoing |
|---------------------------|----------------------------------------------------------------------|

| ·     | Waterflood programs – future |
|---------------------------|------------------------------------|

| ·     | Horizontal drilling – future |
|---------------------------|------------------------------------|

----

----

| ·     | 2 producing oil properties in the Crossfield and Alexander fields in Central Alberta. |
|---------------------------|---------------------------------------------------------------------------------------|

| ·     | 100% working interest in the Crossfield property – 1 producing well with single well battery with approximately 5 barrels per day (bbl/d) net production – production continues to be stable with no capital commitment required. |
|---------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·     | 55% working interest in the Alexander property – 1 shut in oil well with a single well battery, 1 suspended well. Expected production of approximately 10 bbl/d net production upon restarting shut in oil well after spring break up. – see subsequent event notes |
|---------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

|                   | KODIAK ENERGY, INC. |
|------------------------|---------------------|
|                   |                |   (Registrant) |
|                   |                |   |
| Dated: August 13, 2010 |                | By: /s/  William S. Tighe      |
|                   |                | William S. Tighe |
|                   |                | Chief Executive Officer |

----